Saving for retirement is probably one of the most important financial planning milestones in a person’s life. Unfortunately, however, it is not always given the importance it requires. In general there are two circumstances that often hinder this task: on the one hand, there is no deep-rooted culture of saving and financial planning in general. Savings tend to be sporadic, without a specific plan, and many people live without a minimum security savings cushion.
Tips for saving efficiently for retirement
Start as early as possible.
Time is an essential ally in this objective. It will make the effort more gradual and will make it possible to deal with possible unforeseen events. Although it is not yet common in many countries around the world, the ideal time to start saving for retirement is after getting our first job.
Draw up a detailed plan
Saving as a simple habit of putting money aside does not usually work. Make a plan in which you are clear about your starting point, the resources you have and will have and, above all, where you want to get to, that is, how much you are going to need in your retirement.
This exercise can be done thanks to the simulators that allow you to estimate your future public pension. Your savings goal should be the one that allows you to cover the gap between the monthly income that your pension will provide and the level of spending that the standard of living you intend to lead when you retire will require.
It’s better to save a modest amount every month than larger amounts sporadically. This is a long-distance race and consistency is what will get you to the finish line successfully. Don’t dismiss small amounts of savings as irrelevant: they produce miracles in the long run if saved consistently.
Choose the savings vehicles that best suit your needs
One of the cornerstones of retirement savings should be a pension plan or an insured pension plan. This represents a very important tax saving that can make the difference in your savings plan if you reinvest the money you save in taxes. Complementing your pension plan with investment funds can be highly beneficial, especially once you have reached the legal contribution limit.
Always maintain an investor profile appropriate to the present circumstances
When there is still a long time to go before retirement, you can and should take risks in order to maximize returns. Those risks that can be taken are directly proportional to the time remaining until you retire. Therefore, you should moderate your exposure to risk as time goes on. If this is something you prefer to delegate to professionals, you can opt for life-cycle pension plans: just choose a plan with a maturity close to your retire